There’s no doubt that psychology plays a massive part in how we perceive a particular price. Many of the age-old techniques are no longer relevant as we’ve all developed an advanced level of scepticism when buying. But there are a few pricing tactics which still persuade us all, whether we like to admit it or not.
Magic number 9
Including a 9 at the end of your price still works for three reasons.
Firstly, as we read from left to right, our eyes initially encounter the leftmost digit, so £49 is a whole lot better than £50. When confronted with an odd number, we’ll round it down to something simpler.
Secondly, a study by Robert M. Schindler & Thomas M. Kibarian highlighted the fact that when we see a price ending in .99, we associate it with a discount, which in most cases is a good thing.
Thirdly, a paper by the Journal of Consumer Research discovered that odd numbers force most of us to consider the logic behind a price, rather than rely on our gut instincts alone.
When potential buyers are wrangling with a purchase decision, they’re usually searching for a perceived value. Mentioning how much they’ll save versus a competitor doesn’t help in this respect and can actually do more harm than good. It’s hard to compare like for like as it’s uncommon to find two products which are completely identical.
So rather than a market-based price, opt for a cost-based price and emphasise the value in what you’re offering. Buyers are usually unaware of the majority of costs and mentioning a few of these may help to challenge their perception.
Little details can make a huge difference in how a price is communicated and certain words can trigger associated connotations. When discussing price, do use words such as “low” or “small”, but avoid saying “high” or “large”, even in a different context. So stay clear of using phrases such as “high performance” or “large impact”.
Calculate a daily rate
Another tried and tested tactic is to mention an equivalent daily rate, for example, 59p per day. This should be secondary to your main price, but could be stated in the same breath. Studies have uncovered that when a daily rate is referred to, a buyer perceives a lower price overall.
Display an overly high comparison price
All of us expect a certain amount of choice and if you offer a product or service with pricing tiers, then you should consider introducing one option which doesn’t warrant great value. In the example above, SurveyMonkey has a Platinum package which is considerably higher than its Gold counterpart. The Platinum package acts as a decoy and increases the perceived value in the Gold offering.
Interestingly, the designers have also displayed the annual price pro-rata which makes it appear even cheaper than the Select tier.
Consider the best form of discounting
There are two options for discounts, either provide the new lower price or mention a saving as a %. Which to go for depends on the numbers in question. In the example above, PureVPN has made the 73% saving prominent, which makes sense given that it’s much higher than the 18% on the right.
If the discount was in fact 20% for both options, then it would be more effective to display the actual saving in pounds.
Selecting the right pricing strategy for a product or service is challenging and requires a degree of trial and error. But you can be certain that there’s always an element of psychology at work which can sway a potential buying decision in your favour – or otherwise.